Beyond normal form invariance: first mover advantage in two-stage games with or without predictable cheap talk
Hammond, Peter J. (2008) Beyond normal form invariance: first mover advantage in two-stage games with or without predictable cheap talk. Working Paper. Coventry: University of Warwick, Department of Economics. Warwick economic research papers (No.835).
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Von Neumann (1928) not only introduced a fairly general version of the extensive form game concept. He also hypothesized that only the normal form was relevant to rational play. Yet even in Battle of the Sexes, this hypothesis seems contradicted by players' actual behaviour in experiments. Here a refined Nash equilibrium is proposed for games where one player moves first, and the only other player moves second without knowing the first move. The refinement relies on a tacit understanding of the only credible and straightforward perfect Bayesian equilibrium in a corresponding game allowing a predictable direct form of cheap talk.
|Item Type:||Working or Discussion Paper (Working Paper)|
|Subjects:||H Social Sciences > HB Economic Theory|
|Divisions:||Faculty of Social Sciences > Economics|
|Library of Congress Subject Headings (LCSH):||Von Neumann, John, 1903-1957, Game theory, Equilibrium (Economics), Bayesian statistical decision theory|
|Series Name:||Warwick economic research papers|
|Publisher:||University of Warwick, Department of Economics|
|Place of Publication:||Coventry|
|Official Date:||10 January 2008|
|Number of Pages:||24|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
Amershi, A.H., Sadanand, A.B., and Sadanand, V. (1985) \Manipulated Nash Equilibria I: Forward Induction and Thought Process Dynamics in Extensive Form" University of British Columbia, Economics Working Paper 928.
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